Indian IT companies are in the midst of the industry’s largest retrenchment drive with seven of the biggest IT firms planning to ask at least 56,000 engineers to leave the firm.
The number is twice the employees laid off by the companies in 2016, reflecting their under-preparedness while adapting to latest technologies and also dealing with fallout of the protectionist policies given by US President Donald Trump.
The IT companies includes both multinational firms with Indian firms with their footprint in India. The seven IT companies in India includes Infosys Ltd, Wipro Ltd, HCL Technologies Ltd, Cognizant technology solutions Corp, Tech Mahindra Ltd, DXC technology co, France based Capgemini SA which all together employ 1.24 million people and planning to cut off 4.5% of their employees this year.
Despite of hiring young fresh engineers these firms will end their year with fewer employees than they have started this year. Preparing for the layoffs, each company has already put higher number of employees on notice by giving them low rank. Cognizant has placed around 15000 employees in the bucket 4 which is the lowest category and the Infosys placed more than 3,000 employees in low category employees which still need improvement in their work.
DXC Technology planning to reduce the employees from 50 to 26. The company planning to ask 5.7 % of its employees in India to leave the firm this year. The companies are still in denial mode and attribute the marginal increase in the number of poor performance for a more rigorous evaluation process. Cognizant has not conducted any cut off, a spokesman said by reviewing the employees by comparing with past years. A spokesman from Infosys said,” our company’s performance management process provide a bi-annual assessment performance. We do this evaluation every year and the number could vary every year.”
Also Wipro spokesman said,” The performance may lead to separation of some employees from the company and the number vary every year.” Spokespersons from Infosys, Wipro, and Capgemini termed the numbers in this article for being laid off is speculative. But DXC spokesperson declined this statement.
Tech Mahindra spokesperson said that the company has a process of laying out bottom performers every year and this year is same as every year.” The HCL spokesperson said that the company does not have any plans to ask more employees to leave in the current year. In past, Indian IT firm’s employees would be asked to leave every year in the range between 1% and 1.5%, on account of poor performance, the number was 3% for foreign companies with Indian operations. But, this year Indian and foreign companies employees lay off range is between 2-6%.
The largest IT employer organization, Tata Consultancy Services Ltd, with nearly 390,000 employees does not have any plans to ask anyone to leave the firm this year. The problem is a fundamental change in the business model that Indian IT companies are wrestling with this problem, as if the world has become digital they have not enough to deal with it.
On condition of anonymity the HR head at one of the seven companies said , “The Digital revenue is less than a fourth of traditional business. While traditional business is slowing down. All of us have to re look at the existing talent to make sure it is aligned to our future requirements.”
The IT companies start working on various newer technologies such as cloud computing, they are fast moving from a model led by people, that means they need less employees. While, many of the IT companies have embraced automation tools do perform the mundane, repeatable tasks that earlier were performed by an group of engineer.
The pressure on profitability and poor growth has prompted most companies to save on costs. In March 2017 it is for the first time since 2009-2010 that TCS, Infosys and Wipro grew slower than industry with Nasscom’s growth rate of 8.6% in constant currency terms in the year 2017 even as profitability of all the companies is declined this year in March.
Meanwhile Donald Trump’s protection policies asking more Indian IT companies with Indian H1B Visa holders to return back to their home.